Social Norms and Spending

What does it take to end conspicuous consumption? Conspicuous thrift, of course. A recent article in The New York Times suggests that pinching pennies is chic.

This is a great example of the power of social norms… and the magnitude of force needed to change them. Key quotes:

Any sharp decline in consumer spending will feed on itself, said Juliet B. Schor, an economist at Boston College and the author of The Overspent American: Upscaling, Downshifting and the New Consumer (Basic Books, 1998). Typically, people spend when those around them are spending, but in a downturn, the need to compete evaporates. “You can stay right where you are without falling behind,” Ms. Schor said.

Carol Morgan, who teaches law at the University of Georgia and whose husband has a private law practice, said she felt a responsibility to cut needless spending. “That is probably something that is a prudent thing to do in any event, but particularly now I see it as the right thing, as the moral thing to do,” she said, adding that she also hoped to increase her charitable giving. “Before, extravagance and opulence was the aspiration, and if we can replace that with a desire to live more simply — replace that with time with family, or time for spirituality — what a positive outcome to a very negative situation.”

“I think this economy was a good way to cure my compulsive shopping habit,” Maxine Frankel, 59, a high school teacher from Skokie, Ill., said as she longingly stroked a diaphanous black shawl at a shop in the nearby Chicago suburb of Glenview. “It’s kind of funny, but I feel much more satisfied with the things money can’t buy, like the well being of my family. I’m just not seeking happiness from material things anymore.”

“I do think that maybe now it’s a little bit chic or something to save money, or to be pinching pennies,” she said. Just as she stopped carpooling when gas prices went down, [Jennifer Riley] said, she predicted that people would start buying again when the economy rebounded. “That’s just my own, maybe, cynical belief,” she said.